Damage conversion is a mechanic that changes the damage type from a hit into another damage type. Damage conversions do not apply to damage over time.
For this type of modifier, the original damage is replaced with the converted damage. The amount of any given damage type that can be converted in this way cannot exceed 100%. If the combined value of all converted to modifiers for a given damage type is greater than 100%, the values are scaled so that the total is 100%. Conversion from skill gems (both active and support skill gems) take priority over conversion from other sources (such as equipment), and is not scaled. The game does not distinguish between damage converted by passives and by gear; this may be of some importance when dealing with Avatar of Fire.
Damage conversion only flows in one direction between types, possibly skipping types, but never going in reverse:
The reason is that conversion is an iterative process from one damage type to the next, so if it goes backwards there’ll be an infinite loop. Converted damage can be converted further itself.
Elemental conversion follows a specific order and can’t go backwards or it’ll result in a loop. Would it be possible to implement a “conversion flag” so you could convert backwards in the order, then have the game check if the damage had already been converted once it hits whatever the source damage type was?
Probably not, although I don’t have a full logical proof of this. Practically, definitely not – the amount of extra processing added to common stat calculations by that would be unreasonable, if it were possible.